Businesses that are not incorporated identify the investment of the sole proprietor through the account.
Question
Businesses that are not incorporated identify the investment of the sole proprietor through the account.
Solution
The investment of the sole proprietor in a business that is not incorporated is identified through the "Owner's Equity" account. Here are the steps:
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The sole proprietor invests capital into the business. This could be in the form of cash, property, or equipment.
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This investment is recorded in the business's accounting system. It is typically recorded in the "Owner's Equity" account. This account represents the owner's claim to the assets of the business.
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The "Owner's Equity" account is part of the business's balance sheet. The balance sheet follows the equation: Assets = Liabilities + Owner's Equity.
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Therefore
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